Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Services Contracting Volume 1

Recommendation 20: Clarify the definitions of personal and nonpersonal 

services and incorporate in the DFARS a description of supervisory 

responsibilities for services contracts.

Problem 

The FAR, DFARS, and other DoD issuances provide policies for contracted services for mission

support. Confusion exists as to when these commercial and noncommercial services should be 

contracted either as a personal or nonpersonal service, and what supervisory responsibilities 

contractors must exercise when providing contracted services.

Background 

In recent decades, federal agencies adopted a multisector workforce approach to gain access to the 

evolving and necessary skills, technologies, and expertise required to accomplish their missions in the 

21st century. DoD policy for total force management, found at 10 U.S.C. § 129a, General Policy for Total 

Force Management, stipulates “the Secretary of Defense shall establish policies and procedures for 

determining the most appropriate and cost efficient mix of military, civilian, and contractor personnel 

to perform the mission of the Department of Defense.”1

The National Academy of Public Administration, in a November 16, 2005 paper titled Managing Federal 

Missions with a Multisector Workforce: Leadership for the 21st Century, cites a variety of reasons for 

workforce restructuring. Reasons include the following: “to utilize existing service delivery 

mechanisms, to acquire hard to find skills, to save money, to have the private sector do work that is not 

inherently governmental, to augment capacity on an emergency basis, and to reduce the size of 

government.”2 Within the workforce structure, DoD predominately acquires contractor personnel by 

nonpersonal service contracts. 

A stringent requirements-determination process in DoD ensures that the agency does not award a 

contract for services unless the following apply:

§ The workload for the requirement has been validated.

§ Government personnel with the required training and capabilities are not available within the 

agency.

§ For a personal services contract, the requirement must be specifically authorized by statute.

 

1 General Policy for Total Force Management, 10 U.S.C. § 129a. 2 The National Academy of Public Administration, Managing Federal Missions with a Multisector Workforce: Leadership for the 21st

Century, Academy Initiative, November 16, 2005, accessed December 8, 2017, 

http://www.distributedworkplace.com/DW/governmentgovernment/National%20Academy%20of%20Public%20Administration%202005.

pdf. 
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Services Contracting Volume 1

A formal review and approval process exists within the DoD Components.

3 The following DoDIs

address these requirements:

§ DoDI 5000.74, Defense Acquisition of Services, defines the service acquisition category (S-CAT) 

levels, policies, responsibilities, and procedures for acquiring services.

4

§ DoDI 5000.02, Operation of the Defense Acquisition System, requires the program manager, in 

conjunction with the designated DoD Component human systems integration staff, to 

determine the most efficient and cost-effective mix of DoD workforce and contract support.

5

The mix of military, DoD civilian, and contract support necessary to operate, maintain, and 

support the system is determined based on the manpower mix criteria is DoDI 1100.22, Policy 

and Procedures for Determining Workforce Mix.

6

KBS (often referred to as A&AS7) contracted commercial and noncommercial services are by far the 

largest category of services supporting the multisector workforce, now accounting for $37.7 billion in 

annual DoD expenditures.

8 DoD acquires the contractor portion of the multisector workforce through 

either a personal or nonpersonal services contract; 99.1 percent are awarded as nonpersonal services.

 

3 General Policy for Total Force Management, 10 U.S.C. § 129a. Policy and Procedures for Determining Workforce Mix, DoDI 1100.22 

(2010).

4 Acquisition of Services, DoDI 5000.74 (2016). Procurement of Contract Services: Management Structure, 10 U.S.C. § 2330. 5 Operation of the Defense Acquisition System, DoDI 5000.02 (2015). 6 Policy and Procedures for Determining Workforce Mix, DoDI 1100.22 (2010). 7 “Knowledge Based Services (A&AS),” DAU Service Acquisition Mall (SAM), accessed December 8, 2017, 

http://sam.dau.mil/Content.aspx?currentContentID=knowledge_based_services. 8 “Services Spend Charts,” Services Acquisition (SA), Defense Procurement and Acquisition Policy, accessed December 8, 2017, 

https://www.acq.osd.mil/dpap/sa/Learn-More/ServiceSpendCharts.html. 
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Figure 5-1. FY 2017 Spend—DoD as Funding Department9

A lack of clarity regarding the differences between personal and nonpersonal services contracts raises 

concern among government personnel who may incorrectly conclude that contractor employees 

performing alongside government employees are (or should be) under a contract for personal services. 

Congress, federal agencies, and DoD have enacted a number of statutes and policies outlining the 

requirements for appropriate use of contracts for A&AS and KBS.

§ In 1992, OMB issued Circular A-120, Guidelines for the Use of Advisory and Assistance 

Services. DoD implemented OMB Circular A-120 as well as DoDD 4205.2, DoD Contracted 

Advisory and Assistance Services (CAAS) outlining policy, responsibilities, and procedures for 

the management, acquisition, and use of CAAS for requirements within DoD.

10 OMB Circular 

A-120 was rescinded in 1994 and DoD rescinded DoDD 4205.2 in 2004, citing redundancy with 

its other service contracting policies.

11

§ OMB issued Policy Letter 93-1, Management Oversight of Services, on May 18, 1994, following 

a review of service contracting practices and capabilities across the Executive Branch as part of 

the National Performance Review. It established responsibilities and “guiding principles 

through the ‘best practices’ concept to help agencies develop, analyze, and perfect requirements 

 

9 Data from Federal Procurement Data System, extracted January 2, 2018. Categories based on DPAP Crosswalks services and supplies 

and equipment taxonomy at https://www.acq.osd.mil/dpap/sa/Tools/crosswalks.html, accessed January 2, 2018. 10 DoD Contracted Advisory and Assistance Services (CAAS), DoDD 4205.2 (1992). 11 GAO, Federal Contracting: Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance 

Services, GAO-08-319, accessed December 8, 2017, http://www.gao.gov/assets/280/274250.pdf. 

Services ($164.3 bn.) Supplies and equipment ($164.0 bn.)

Aircraft, 

ships/submarines, 

land vehicles 

($64.3 bn.) 39%

Weapons and 

ammunition ($20.5 

bn.) 12%

Electronic and 

communications 

($23.5 bn.) 14%

Sustainment 

($36.7 bn.) 22%

Facilities ($7.6 

bn.) 5%

Clothing, textiles, 

subsistence ($11.3 

bn.) 7% R&D ($25.2 bn.) 

15%

Knowledge 

Based 

Services 

($37.7 bn.) 

23%

Logistics 

management 

($6.0 bn.) 4% Equipment 

related ($19.9 

bn.) 12%

Electronic and 

communication 

($19.2 bn.) 12%

Medical ($13.5 

bn.) 8%

Transportation 

($7.4 bn.) 5%

Facility ($25.4 

bn.) 15%

Construction 

($9.9 bn.) 6%

50% 50%
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for service contracts which, in turn, should help improve contract management and 

administration.”12

§ The 1994 FASA provided a definition for A&AS and authorized both civilian agencies and DoD 

to use task order contracts with limits on the ordering period to procure A&AS.

13 A&AS was 

defined as those services provided by nongovernmental sources for management and 

professional support services; studies, analyses, and evaluations; and engineering and technical 

services.

14 FASA also directed OMB to collect and report, annually, obligations for A&AS in the 

President’s budget.

15 The FAR Subpart 37.2 was amended in 1995 to include the definition for 

A&AS. The FAR was later amended in April 2000 to move the definition for A&AS from FAR 

Subpart 37.2 to FAR Subpart 2.101, Definitions.16

‘Advisory and assistance services’ as defined in FAR Subpart 2.101 are ‘those services provided under 

contract by nongovernmental sources to support or improve: organizational policy development; decisionmaking; management and administration; program and/or project management and administration; or 

R&D activities. It can also mean the furnishing of professional advice or assistance rendered to improve 

the effectiveness of Federal management processes or procedures (including those of an engineering and 

technical nature). In rendering the foregoing services, outputs may take the form of information, advice, 

opinions, alternatives, analyses, evaluations recommendations, training and the day-to-day aid of support 

personnel needed for the successful performance of ongoing Federal operations.’ They are classified into 

three major categories: (1) management and professional support services; (2) studies, analyses and 

evaluations; and (3) engineering and technical services.

17

§ OFPP issued Policy Letter 11-01, Performance of Inherently Governmental and Critical 

Functions, dated September 12, 2011, pursuant to section 6(a) of the Office of Federal 

Procurement Policy Act, 41 U.S.C. 405(a), the President’s March 4, 2009, Memorandum on 

Government Contracting, and section 321 of the FY 2009 NDAA, Pub. L. No. 110-417. The intent 

of the policy is to provide guidance to help agencies manage functions that are closely 

associated with inherently governmental and critical functions performed by both Federal and 

contractor employees.18

Neither the FAR nor the DFARS defines KBS. DoD designated KBS as a portfolio group in the DoD 

taxonomy of services on November 23, 2010,

19 subsequently updated on August 12, 2012.20 The 

taxonomy now reflects how “DoD organizes its spend for services and supplies, and equipment using a 

 

12 Management Oversight of Service Contracting, OMB Policy Letter 93-1, May 18, 1994. 13 Budget Contents and Submission to Congress, 31 U.S.C. § 1105(g). Advisory and Assistance Services, 41 U.S.C. § 4105. 14 Budget Contents and Submission to Congress, 31 U.S.C. § 1105(g). 15 Ibid.

16 Federal Acquisition Circular 97-17, FAR Case 1999-014 (2000). 17 FAR Subpart 2.101 Definitions, Current to: FAC 2005-96 (2017). 18 Performance of Inherently Governmental and Critical Functions, OFPP Policy Letter 11-01 (2011). 19 OSD(AT&L), Defense Procurement Acquisition Policy (DPAP) Memo, Taxonomy for the Acquisition of Services, November 23, 2010, 

accessed December 8, 2017, http://bbp.dau.mil/docs/Taxonomy%20for%20the%20Acquisition%20of%20Services.pdf. 20 OSD(AT&L), Defense Procurement Acquisition Policy (DPAP) Memo, Taxonomy for the Acquisition of Services and Supplies & Equipment,

August 27, 2012, accessed December 8, 2017, https://www.acq.osd.mil/dpap/policy/policyvault/USA004219-12-DPAP.pdf. 
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taxonomy that maps Product Service Codes (PSCs), as set forth in the Federal Procurement Data 

System Product and Service Codes” (shown below).

21

Table 5-1. Services Portfolio Group: PSC Definitions; Knowledge-Based Services

Portfolio Category PSC Title

Engineering and Technical Services

R412 Simulation

R413 Specifications Development Services

R415 Professional Services/Tech Sharing–Utilization

R425 Engineering and Technical Services (Includes R414 and R421 

merging in FY 2012)

Program Management Services

Axx6 RDT&E Management Support

B Special Studies and Analyses—Not R&D

R405 Operations Research & Quantitative

R406 Policy Review/Development Services

R408 Program Management/Support Services

R410 Program Evaluation/Review Development (Includes R407 and 

R409 merging in FY 2012)

R499 Other Professional Services

R707 Contract & Procurement Support

R799 Other Management Support Services

Management Support Services R7xx Management Support Services Less R706, R707, and R799

Administrative & Other Services R6xx Administrative Support Services

T Photographic, Mapping, Printing, and Publications Services

Professional Services R4xx Professional Services Less R405-R410, R412-R415, R421, R425, 

R426 and R499

Education and Training U Education and Training Services

DoD uses the taxonomy to facilitate strategic sourcing.

22 The taxonomy identifies a KBS Portfolio 

Group that includes engineering and technical services, program management services, management 

support services, administrative and other services, professional services, and education and training.

23

DoD separated the Logistics Management Services Portfolio Group from the KBS Portfolio Group and 

established it as its own portfolio group. A&AS is neither discussed nor identified as a separate 

portfolio group within the taxonomy.

The following is a description of KBS found in the Defense Acquisition University (DAU) Service 

Acquisition Mall (SAM):

KBS, commonly referred to as Advisory and Assistance Services (A&AS), relates to tasks that require the 

application of detailed processes or technical knowledge. A&AS pertains to the details provided under 

contract by nongovernmental sources to support or improve organizational policy development, decisionmaking, management and administration, program and/or project management and administration, or 

research and development (R&D) activities. It can also involve the furnishing of professional advice or

 

21 Ibid. 22 Ibid. 23 Ibid.
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assistance rendered to improve the effectiveness of Federal management processes or procedures, 

including those of an engineering and technical nature. The result of these services may take the form of 

information, advice, opinions, alternatives, analysis, evaluations, recommendations, training, and the 

day-to-day aid of support personnel needed for the successful performance of ongoing Federal operations.24

Section 812 of the FY 2017 NDAA (Pub. L. No. 114-328 § 812) amended 10 U.S.C. § 2330a to add KBS, 

logistics management services, equipment related services, and electronics and communications 

services as separate service acquisition portfolio groups for the budgetary data collection requirement. 

Additionally, this legislation requires an “annual inventory, of activities performed during the 

preceding fiscal year pursuant to staff augmentation contracts for the DoD.”25 The term staff 

augmentation contracts is defined in this statute and is stated as, 

means services contracts for personnel who are physically present in a government work space on a fulltime or permanent part-time basis, for the purpose of advising on, providing support to, or assisting a 

government agency in the performance of the agency’s missions, including authorized personal services 

contracts.26

Agencies acquire A&AS, KBS, and other staff augmentation requirements by either a personal or 

nonpersonal services contract. The primary difference between award of a contract for a personal 

service and award of a nonpersonal service is that a statutory authority must exist for the award of 

certain requirements for a personal service contracts.

27 Another difference involves the supervisory 

responsibilities of the contractor. In the case of a nonpersonal services contract, the contractor is solely

responsible for the supervision of its employees.

A nonpersonal services contract, as defined in FAR Subpart 37.101, “means a contract under which the 

personnel rendering the services are not subject, either by the contract’s terms or by the manner of its

administration, to the supervision and control usually prevailing in relationships between the 

Government and its employees.”28

A personal services contract, as defined in FAR Subpart 2.101, “means a contract that, by its express terms 

or as administered, make the contractor personnel appear to be, in effect, government employees 

(see 37.104).”29 FAR Subpart 37.104(a) further states, “a personal services contract is characterized by 

the employer-employee relationship it creates between the government and the contractor’s 

personnel.

30

 

24 “Knowledge Based Services (A&AS),” DAU Service Acquisition Mall (SAM), accessed December 8, 2017, 

http://sam.dau.mil/Content.aspx?currentContentID=knowledge_based_services. 25 Procurement of Services: Tracking of Purchases, 10 U.S.C. § 2330a. 26 Ibid. 27 Employment of Experts and Consultants; Temporary or Intermittent, 5 U.S.C. § 3109. Personal Services Contracts, 10 U.S.C. § 1091.

Authority to Procure Personal Services, 10 U.S.C. § 129b. Employment Experts and Consultants; Temporary or Intermittent, 5 U.S.C. 

§ 3109. 28 FAR Subpart 37.101 Definitions, Current to: FAC 2005-96, November 6, 2017. 29 FAR Subpart 2.101 Definitions, Current to: FAC 2005-96, November 6, 2017. 30 FAR Subpart 37.104(a), Current to: FAC 2005-96, November 6, 2017.
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Within a multisector workforce structure, contractor personnel perform alongside government

personnel. A clear understanding of the supervision of contractor employees in this environment is 

necessary to ensure that a nonpersonal services contract does not inadvertently function as a personal 

services contract. Under nonpersonal services contracts, contractors are solely responsible for 

supervision of their employees. This arrangement necessitates a detailed definition of the supervisory 

functions provided by the contractor in contrast to the role of the government in providing direction 

and oversight to contractor employees. In general, government personnel may provide guidance and 

direction to contractor employees and approve work product (see 37 U.S.C. § 104c 1 ii); however, 

direction must not include functions such as recruitment, hiring, termination, compensation, and other 

functions.

Findings

Numerous audits issued by GAO and the Inspector General (IG) address long-standing congressional 

concerns with federal agency processes for requirements determination, reporting mechanisms, and 

management of A&AS contracts.

31 These reports highlight challenges that federal agencies and DoD 

encounter with how they manage and track contracts for A&AS, KBS, and staff augmentation services 

within their organizations.

32

Current acquisition policies are vague on the supervisory responsibilities of contractors providing 

contracted services support. Policies are also vague on the appropriate direction that government

employees can provide to contractors performing under these contracts. This ambiguity has created 

confusion about the appropriate use of personal and nonpersonal service contracts. Providing clear and 

definitive guidance will streamline the requirements definition process and improve communication 

between the requiring activities, contracting organizations, and contractors performing these types of 

services. 

The DFARS should include definitions for both KBS and staff augmentation services. Adopting these 

recommended regulatory changes would produce a clearer understanding of what is and is not a 

personal service or a nonpersonal service, what statutory authorities are necessary for the award of a 

personal services contract, and what type of direction government employees can provide contractor 

employees on nonpersonal services contracts. 

Conclusions

DoD acquires the contractor element of Total Force Management using contracted services, whether 

personal or nonpersonal.

33 In an effort to resolve confusion concerning the acquisition of personal or 

nonpersonal services, federal agencies and DoD continue to develop and implement a variety of 

policies and instructions aimed at improving vague definitions and existing guidance on data 

collection requirements for congressional reporting and internal spend analysis. These efforts have not 

fully addressed the challenges and confusion on this topic continues within the acquisition workforce. 

There is a need for updated and definitive guidance and policy on when contract services should be 

 

31 GAO, DoD Consulting Services: Erroneous Accounting and Reporting of Cost, GAO/NSIAD-98-136, Appendix I: Selected Reports About 

A&AS Management and Reporting Problems, 12-14, accessed December 8, 2017, http://www.gao.gov/assets/230/225673.pdf. 32 GAO, Federal Contracting: Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance 

Services, GAO-08-319, accessed December 8, 2017, http://www.gao.gov/assets/280/274250.pdf. 33 Acquisition of Services, DoDI 5000.74 (2016). Policy and Procedures for Determining Workforce Mix, DoDI 1100.22 (2010).
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acquired as either a personal or nonpersonal service. Furthermore, there is a need to clarify the 

supervisory responsibilities of contractors and the types of direction government employees may 

provide to contractors.

Implementation

Legislative Branch

§ No statutory changes are required.

Executive Branch

§ Supplement FAR 37.102 Policy (under FAR 37.1 Service Contracts – General) by adding

DFARS 237.201(j).

§ Modify DFARS Subpart 237.5, Management Oversight of Service Contracts, to provide clarity 

on supervisory responsibilities of contractors performing contracted services. The modification 

includes deleting language in DFARS 237.503 and adding DFARS 237.504.

§ Supplement FAR 37.203 Policy for A&AS by adding DFARS 237.203(e) to provide guidance that 

it is appropriate to use a personal services contract to acquire A&AS and KBS if the requirement 

is authorized by statute.

§ Add a definition for Knowledge-Based Services (KBS) and Logistic Management Services at

DFARS 237.101 Definitions.

§ Update the DoD COR Handbook to incorporate these recommendations.

§ Update DAU training to reflect these recommendations.

Implications for Other Agencies

§ The recommendations, as stated here, would have no implications for other agencies; however, 

civilian agencies would benefit from adopting these recommendations; thus, the Defense 

Acquisition Regulation Council should discuss implementation of these recommendations at 

the FAR level with the Civilian Agency Acquisition Council.